Footnotes is a collection of stories from around the accounting profession curated by actual humans and published every Friday at 5pm Eastern. While you’re here, subscribe to our newsletter to get the week’s top stories in your inbox every Tuesday and Friday. See ya.
Survey: Accounting Graduates Favor Advisory Work, Earn More Than Peers in Audit and Tax [INSIDE Public Accounting]
According to The State of Pennsylvania Accounting Firms in 2023, CPAs who begin their careers in advisory services are earning as much as CPA seniors in the traditional fields of audit and tax, and they are out-earning non-CPA seniors in those areas. Entry-level CPAs in advisory practices are making $11,000 more than CPAs starting out in audit and tax, and $20,000 more than non-CPAs in advisory. “We’ll see how those trends unfold overtime as the economy continues to shift,” says Adam Batechlor, chief strategy and innovation officer at the Pennsylvania Institute of Certified Public Accountants (PICPA), which conducted the survey of more than 300 CPA firms in the state with Hinge Research Institute. The report says CPAs are generally paid more than non-CPAs, but the pay gap between the two shrinks when moving from entry-level to the manager level. The gap widens again at the upper levels. Nearly all firms in the survey raised fees.
PwC Doles Out Bonuses and Raises While Paring Back Remote Work [Bloomberg Tax]
“We’ve hired tens of thousands of people over the past three years who have never had the full experience of this firm, the full experience of this community when we are truly together,” said Yolanda Seals-Coffield, PwC’s chief people officer. “So we want to bring some of that back. It will require creativity, absolutely, for people who are more geographically dispersed.” The firm did not disclose the size of its bonus or salary increases. Still, any bump in compensation contrasts would contrast with its competitors, which have in recent months announced layoffs in their consulting practices and expense cuts amid ebbing demand for services. Although performance-based reductions are expected this year, PwC has no plans for market-based layoffs, the firm said. PwC did not disclose how many staff members would be cut.
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AI In Accounting
KPMG Australia expands KymChat to search manuals and policies [iTNews]
KPMG Australia has updated its generative AI technology KymChat to search across its quality and risk manual and independence policies. The first use case of the digital assistant was to make team directories more easily searchable, for greater ease of locating colleagues. KymChat is now also capable of searching the firm’s policies, leading to organisational efficiencies, according to KPMG chief digital officer John Munnelly. Speaking at a Legal Innovation and Tech Fest in Sydney, Munnelly said the policies were uploaded to KymChat “a couple of weeks ago”. “It is now searching our quality and risk manual and independence questions, and it is absolutely amazing,” he said.
AI changing landscape in accounting [Mississippi Business Journal]
EisnerAmper, an international business advisory firm, is investing heavily in technology including AI and leveraging it to do things faster, better and provide more value to its clients, said Jason Juliano, director of digital transformation. EisnerAmper Digital is merging with Louisiana-based Postlethwaite & Netterville which has offices in Mississippi. “We used a smart audit process to feed in things like invoices, purchase orders and contracts using natural language processing, which is an AI model,” Juliano said. The models can read documents and pull-out information that auditors are looking for. “It makes doing audits much faster, eliminating some of the human error, providing move value to some of the accounting audit work that we do for our clients,” he said.
New head of CLA Dallas office wants to ‘make a splash,’ grow firm’s presence [Dallas Business Journals]
Keith Davidson remembers his first day of work at PwC in 2005 vividly. “I cried in the bathroom,” Davidson said. “My senior told me I was never going to be any good in this industry and that I just didn’t have it. On day one. I was 21 at that point.” Davidson’s goal was to become a chief financial officer and be a decision-maker at a company. He pursued an accounting career and took a job at PwC because of what he described as a “false choice” between having to do either tax or audit to move up the ranks. After that first day, Davidson “managed to survive” and eventually shifted his career into corporate finance. He worked for Kimberly-Clark Corp. for several years, followed by a stint at start-up company EndoChoice until it got acquired by Boston Scientific Corp. in 2016. Davidson then made what he now calls a “mistake” of going back to a large company and working for AmerisourceBergen. He described the role as “so far in the ivory tower” and knew it wasn’t the right fit. Unhappy with the role, Davidson quit his job in early 2019 and somehow found his way back to the accounting world when he took a job with CliftonLarsonAllen LLP. Now, as of Monday, he is the new managing principal of the firm’s Dallas office. Davidson said the last four-and-a-half years at CLA has the been the most enjoyable period of his career because he has been able do what he wants all along — advising businesses and helping their executives make decisions.
How 3 female leaders are breaking barriers in their industries [MIT Sloan News]
Stephanie Smith is a self-admitted practical thinker, so when one of her mentors at RSM told her to apply for the global accounting firm’s Industry Eminence Program when it first rolled out, Smith said she wasn’t ready. Her mentor, however, insisted that she try for the opportunity and see what might happen. “She knew that once I accepted the idea in my head, I was going to do it,” said Smith during a recent MIT Sloan Executive Education webinar, Breaking Barriers and Building Allies. “I always thank her for dreaming on my behalf.” Smith was one of several managers who shared their experiences of overcoming challenges with the help of allies and detailed what they’re doing to help those behind them.
KPMG Pledges Cooperation in Senate Probe of Bank Audits [Bloomberg Law]
KPMG is cooperating with a US Senate inquiry into its relationship with three failed banks and strongly defends the quality of its audits, the Big Four firm says. Sens. Richard Blumenthal (D-Conn.) and Ron Johnson (R-Wis.) on Wednesday opened a wide-ranging inquiry into the accounting firm, requesting in a letter to KMPG CEO Paul Knopp that the firm hand over a massive trove of documents. The senators, who lead the Homeland Security and Governmental Affairs Committee’s Permanent Subcommittee on Investigations, demanded essentially all documents related to the three banks the firm audited. KPMG confirmed late Thursday that it had received the letter and said it would cooperate with the inquiry. “As always, the firm will cooperate with any governmental inquiry, including any request for information regarding the relevant auditing standards,” a KPMG spokesperson said in a statement. “The firm continues to stand by its audits, which were conducted in accordance with those professional standards.”
Chinese companies told to step up data checks on auditors [Financial Times]
China has told state-owned companies and those listed on the mainland to step up their security checks when appointing auditors, as authorities try to tighten controls on sensitive corporate information. State-owned enterprises (SOEs) and listed companies should be more thorough in reviewing the ability of auditors “to safeguard information security” and “strengthen controls of sensitive information”, regulators said on Thursday.
PCAOB enhances transparency of inspection reports [Journal of Accountancy]
The PCAOB has enhanced its inspection reports with a new section on auditor independence and other changes that are designed to “increase transparency by making publicly available more information that is relevant, reliable, and useful for investors and other stakeholders.” The changes will appear in reports for PCAOB inspections completed in 2022, starting with eight reports, according to a news release. “We are committed to making our inspection reports as valuable as possible for investors, audit committees, and others …,” PCAOB Chair Erica Williams said in the news release. “These enhancements will provide relevant information that investors have asked for and support improvements in overall audit quality.”
Deloitte Finds a Use for the Blockchain With Digital Credentials [Bloomberg News]
Deloitte Consulting is looking to utilize blockchain technology to establish digital credentials that can be used for everything from regulatory compliance in banking and decentralized finance to age verification for e-commerce. The reusable credentials will be anchored on the KILT blockchain, Deloitte said in a statement, which noted that the aim is to make identity verification more efficient for both businesses and customers. “Digital credentials that are convenient, cost-effective and secure have the potential to open new digital marketplaces, from e-commerce and DeFi to gaming,” Micha Bitterli, head of Deloitte Managed Services, said in the statement.
KPMG leaving Wells Fargo Center for North Loop, downsizing space [Minneapolis StarTribune]
Accounting firm KPMG is downsizing its downtown space and will relocate from Wells Fargo Center to North Loop Green, a large mixed-use project still under construction. KPMG will lease 45,000 square feet at North Loop Green, down from the 60,000 square feet it occupies at Wells Fargo Center. The deal keeps KPMG in downtown Minneapolis but will move it out of the core of the central business district. The accounting firm follows Piper Sandler & Co., which signed on as the anchor tenant for North Loop Green, which is near Target Field. Piper Sandler will move from U.S. Bancorp Center in the heart of downtown. “Our commitment to the Minneapolis market is unwavering. KPMG is continuing to hire and our business continues to grow in the market, as we embrace a hybrid working model,” said James Powell, office managing partner for KPMG in Minneapolis, in a statement.
Treasury seeks legal advice on PwC tax leaker [The Age]
On the PwC tax leak in Australia:
Treasurer Jim Chalmers has said the federal government is prepared to take further action against PwC if necessary over a leak of confidential government tax plans, but has declined to clarify whether criminal charges are being considered. “I’ve indicated to the Treasury and to the regulators if there are more steps that are necessary, I’m prepared to take them,” Chalmers said at a press conference on Thursday. “I consider what happened there to be completely inappropriate. I’ve said that publicly, I’ve said that privately to the company as well.” Peter Collins, the former PwC partner who leaked confidential government tax plans, has been banned until next year from acting as a tax practitioner. The Tax Practitioner Board (TPB) has ordered PwC to improve its management of conflicts of interest with training sessions for staff, ensuring the co-ordination of registration of conflicts, and a better governance and reporting system within the firm.
EY’s Abandoned Split Exposes Obstacles to Big Tech Consulting [Bloomberg Law]
Ernst & Young has a tech growth problem the size of Silicon Valley, and the firm’s failure to spin off its consulting business has eliminated what it envisioned as a way out. Like all accounting firms, it is barred from forming lucrative consulting partnerships with its audit clients, but the restriction is especially onerous for EY, with its audit roster of tech heavyweights like Amazon, Alphabet, and Salesforce. Its inability to team up with such companies to build and sell tech solutions hamstrings its consulting practice, forcing it to leave millions of dollars on the table for in-demand services crucial to today’s corporations.
Working at PwC as a Spring Intern [The Boar]
As most Economics majors would know, acquiring spring internships can be a stressful and hectic process, with separate applications to every company, plus assessments and online interviews, it can really take a toll. However, it can be really useful to learn more about different internships, since these jobs involve so many diverse departments. These companies are all different, with various departments, work cultures and requirements and there is something new to learn from each of them. Since spring internships are really short and only usually cover one specific department, it can be useful to know about other ones. This article is about the writer’s experience working as a Spring Intern at PwC.
Unity Partners Completes Platform Investment in NDH [Business Wire]
Unity Partners is pleased to announce it has partnered with the leaders of NDH LLC to provide strategic growth capital for the Business. Founded in 2003 and headquartered in Chicago, NDH provides sophisticated tax, accounting and advisory services to more than 1,500 clients throughout the United States. Partners Jeremy Dubow, Josh Harris and Jeff Thomas will continue leading the Business and will serve on the Board of Directors. “With the additional resources from Unity Partners, we will be able to accelerate investment in our technology and talent to improve the experience for our clients,” said Jeff Thomas, Tax Practice Leader.
Sensiba San Filippo Welcomes Five New Partners [AccessWire]
The largest group of partner promotions in the firm’s 45-year history reflects SSF’s ongoing commitment to expanding its offerings to serve clients more effectively. These promotions grow the firm’s partners to 24, nearly half of which are women-well above the accounting industry average. “We are proud and pleased to welcome these distinguished professionals to our partnership,” says John Sensiba, Managing Partner of Sensiba San Filippo. “This is our largest class of new partners, reflecting our growth in recent years. All five have demonstrated a steadfast commitment to not only to serving clients but also to our firm’s people-first focus of serving fellow team members and our communities.”
Cherry Bekaert and Key Partners Recognized at the USA M&A Atlas Awards Celebration [PR Newswire]
Cherry Bekaert is proud to announce it has been awarded Transaction Advisory Firm of the Year by the Global M&A Network at the 5th Annual USA M&A Atlas Awards-Middle Markets Gala. Award winners were announced at the celebration ceremony on April 27th at the Mayflower Hotel in Washington, DC. This marks the 5th consecutive year the Firm has received the USA M&A Atlas Award for Firm of the Year in Valuation, Due Diligence or Transaction Advisory.